Saturday, February 25, 2006

(I submitted last night this short piece for publication in the newsletter of the Michigan Chapter of the Anarchist Black Cross Network, a prison abolition group.)

On September 13, 2005, the Pennsylvania Auditor General issued an audit report of the Pennsylvania Correctional Industries. Among the several negative findings, one stands out: “PCI stockpiled $32 million in cash and investments from profits accumulated from sales made mostly to itself—that is, the Department of Corrections—and to other state departments.”

The “stockpile” was aggregated over a period of nine years, rising from $10M to $32M in just the last five years. The amount of the stockpile is equal to PCI’s entire annual budget. Cash can be easy to come by when you pay your workers well under a dollar an hour and your products are consistently priced among the highest (if not the highest) prices on the market compared to other prisons and private industry.

PCI pays workers from 19 cents an hour to a maximum of 42 cents an hour. “Production bonuses” can raise wages up to 70 cents an hour.

Although sales declined 25% during the five-year audit period, from $44M down to $33M, the prices charged for items ensured high profits. A foam mattress had a PCI price of $123.50, while a private vendor with whom the DOC also does business has the same product for $48.20. Dormitory beds are made in several states’ prison industries: the audit report cited six other states that charge from $121.00 to $310.00 for the finished product; PCI charges $997.18. Bed sheets come at a 50% premium; towels up to a 60% premium; and a washcloth around 40% more than prison industries in other states.

Who pays these premiums? The Pennsylvania taxpayer.

Low costs and high prices make profit, which usually results in cash reserves. Cash reserves are common. But according to the Auditor General, a reserve of 10% to 15% of an annual budget ($3M to $5M in this instance) is appropriate. That is a far cry from the 100% reserve established here. To make matters worse, PCI did not use these excess funds to improve working conditions, training, or to expand their market.

The other findings in the audit report included:

PCI did not live up to its stated mission or its own strategic plans. PCI did not maximize inmate employment. Even though inmate population grew, inmate employment decreased. PCI used its excessive profits and high prices to subsidize 14 unprofitable businesses. PCI used a one-time irregular accounting method to account for a $2 million giveback to the Department of Corrections. PCI did not aggressively market its goods and services.

Press coverage from issuance of the report (September 13, 2005) to the time of this writing (February 24, 2006) has been dismal: one article on September 15, 2005, in the Pittsburgh Post-Gazette (Pennsylvania) on page B-1 that was 711 words long. Nothing has been published since. A follow-up audit is schedule for late 2007.

In a masterpiece of understatement, state Auditor General Jack Wagner said, "This program is not properly run and needs to be seriously overhauled."

Mismanagement and financial irregularities may not be new to government, nor are they unique to Pennsylvania. But to do it all on the back of inmates is shameful.

The Auditor General’s website has a press release and the full text of the report here.